Buying a home that needs a bit of work is not always easy to do. It is a lot of work and a lot of money. Oftentimes financial institutions are unwilling to lend the money for repairs on a home that is uninhabitable.
With a 203K loan, the government will lend the money needed to purchase the home as well as the amount estimated to repair and make renovations to improve the home. In addition to the estimate given to bring the home up to par, an additional 20% will be placed in a reserve to guarantee that you have the funds to complete the renovation. There is also a provision that gives the borrower an amount equivalent to six months of the mortgage to provide shelter during the renovation